Last Month's Employment Numbers Dropped Way More Than Expected

The Home Depot company announced that it will be hiring
70,000 new seasonal workers as U.S. unemployment claims have
fallen to their lowest level in four years.Joe Raedle/Getty Images

WASHINGTON (AP) — One month of slower job growth might have been
a blip. Two suggest a worrisome trend: The economy may be
faltering again.

The United States generated just 115,000 jobs last month, well
below expectations and the fewest since October. The unemployment
rate fell to 8.1 percent, but for the wrong reason — workers
abandoned the labor force.

From December through February, employers added 252,000 jobs a
month on average. But the figure dipped in March and dropped
further in April, raising doubts about an economic recovery that
can't seem to reach escape velocity.

The report Friday by the Labor Department indicated "an economy
that is losing momentum — especially on the jobs front," said Tom
Porcelli, chief U.S. economist at RBC
Capital Markets.

It also dealt a blow to President Barack Obama's re-election
prospects. His presumed Republican opponent, Mitt
Romney, called the report "very disappointing."

Romney said the country should be adding 500,000 jobs a month and
said any unemployment rate above 4 percent is "not cause for
celebration." The rate has not been that low seen since the last
days of the Clinton administration.

"We seem to be slowing down, not speeding up," Romney said on
Fox News
Channel. "This is not progress."

Obama, at a Virginia high school to promote a freeze on interest
rates for student loans, focused on the six-month total of more
than 1 million jobs created. But he said: "We've got to do more."

The 8.1 percent unemployment rate is the lowest since January
2009, the month Obama was sworn in.

Still, the weak job growth caused stocks to fall sharply on Wall
Street. The Standard & Poor's 500 index lost 1.6 percent and
closed its worst week of the year. The price of oil fell more
than 4 percent because of fears of a slowing economy, which
should mean lower gasoline prices soon.

Some of the slower job growth may be because an unusually warm
winter allowed construction firms and other companies to add
workers ahead of schedule in January and February, effectively
stealing jobs from the spring.

The weaker job growth in March and April "looks like some weather
payback," said Paul Ashworth, chief U.S. economist at Capital
Economics.

The balmy weather probably exaggerated job growth in the winter
and makes it look small now, Ashworth said. He expects job
creation to settle into a lackluster range between 175,000 and
200,000.

The economy may not be growing fast enough to produce anything
stronger. Economists surveyed by The Associated Press expect the
economy to grow 2.5 percent this year. That is consistent with
monthly job growth of only about 135,000, according to
calculations by Brad DeLong, an economist at the University of
California, Berkeley.

That is barely enough to keep up with population growth not
nearly enough to recover the jobs lost in the Great Recession
quickly. At this year's pace, it will take until May 2014 to
restore employment to its 2008 peak of 138 million.

The United States has only recovered 3.8 million, or 43 percent,
of the 8.8 million jobs lost between the peak, in February 2008,
and January 2010.

David Boyce, 30, is one of those still looking for work. He lost
his sales job two years ago and ran out of unemployment benefits
in September. He and his wife, who is working reduced hours as a
nanny, are struggling to get by.

"We lived off savings for a while," he said. "And now we're
living off ramen noodles basically."

April's hiring slump was broad. Only two of 10 large categories
tracked by the government, retailers and professional and
business services, hired more workers in April than they did in
March.

The categories of manufacturing and education and health services
added the fewest jobs in five months. Hotels, restaurants and
entertainment companies added the fewest in eight months.

Friday's report noted that that the average hourly wage went up
one penny in April. Over the past year, average pay has increased
1.8 percent, almost a full percentage point shy of the inflation
rate, which means the average American isn't keeping up with
price increases.

The government only counts people as unemployed if they're
looking for work. And 340,000 Americans stopped looking and
dropped out of the labor force in April, which is why the
unemployment rate fell slightly. The dropouts mean just 63.6
percent of working-age Americans were working or looking for
work, the lowest since 1981.

It has been almost three years since the Great Recession ended in
June 2009. Economists say countries usually flounder for several
years after a financial crisis like the one that hit the United
States in 2008.

Damaged banks are reluctant to lend. Borrowers who took on too
much debt in the good times change their ways, cut their spending
and try to repair their finances. The economy grows slowly.

And after this financial crisis, the economy is trying to gather
speed without two of the engines that usually help power economic
recoveries: housing and government spending.

A housing collapse caused the crisis, and home construction isn't
doing much to lead the way out. Housing hasn't contributed to
economic growth since 2005, though a recent burst of apartment
construction might change that this year.

Government hiring also normally boosts employment after a
recession. Not this time. Cities, towns and counties, especially,
have been cutting employment. Private employers have added jobs
every month since February 2010, noted Gary Burtless, senior
fellow in economic studies at the
Brookings Institution. Over that same period, government
payrolls have dropped by 500,000.

Local governments are beginning to recover some of the tax
revenue lost in the recession and its aftermath. But government
hiring hasn't started yet: 15,000 government workers, most of
them in local schools, lost their jobs in April.

The recovery has one thing going for it: Even meager gains in
jobs will feed on themselves and create growth that eventually
becomes self-sustaining. The hiring leads to spending, which
stimulates demand and leads to more hiring, which leads to more
spending. The country has created 1.5 million jobs in eight
months.

The economists AP surveyed said they believe the economy has
entered such a "virtuous cycle." But they said they don't expect
unemployment to reach a healthy level — below 6 percent — until
2015 or later.

Until then, many companies are likely to behave like the North
American division of Philips, the healthcare and consumer
products company. It is hiring, but more slowly than in years
past.

The company is trying to fill 400 jobs, including 127 in
Cleveland, where it has a plant that makes medical imaging
equipment. Things are
improving, said Cynthia Burkhardt, the company's vice president
of talent acquisition. But "I wouldn't say that we're full steam
ahead right now. Everyone's cautious about the economy."